Seagate 2007 Annual Report Download - page 98

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
—
(
Continued)
intercompany sale of certain Maxtor assets. This 2007 valuation allowance release also included a reduction of $322 million in Maxtor goodwill
required as a result of the reversal of valuation allowance previously recorded as of the acquisition date against Maxtor related deferred tax
assets primarily for tax net operating loss carryovers.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets
and liabilities were as follows:
As of June 27, 2008, the deferred tax asset valuation allowance recorded was $433 million. Approximately $22 million of this amount
relates to deferred tax assets acquired in the Maxtor transaction for which the related benefit will be credited directly to goodwill when and if
realized. The net increase in the valuation allowance in fiscal year 2008 was $34 million. In fiscal years 2007 and 2006, the valuation allowance
decreased by $580 million and increased by $327 million, respectively. The fiscal year 2007 valuation allowance release was largely due to the
completion during 2007 of the restructuring of the Company’s intercompany arrangements, which enables the Company to forecast future U.S.
taxable income with greater certainty and U.S. taxable income from the intercompany sale of certain Maxtor assets.
97
June 27,
2008
June 29,
2007
(In millions)
Deferred Tax Assets
Accrued warranty
$
156
$
129
Inventory valuation accounts
44
32
Receivable reserves
15
22
Accrued compensation and benefits
139
119
Depreciation
166
185
Restructuring allowance
13
16
Other accruals and deferred items
110
115
Net operating losses and tax credit carry
-
forwards
585
436
Capitalized research and development
29
32
Other assets
13
12
Total Deferred Tax Assets
1,270
1,098
Valuation allowance
(433
)
(399
)
Net Deferred Tax Assets
837
699
Deferred Tax Liabilities
Unremitted earnings of certain foreign entities
(4
)
(5
)
Acquired intangible assets
(25
)
(31
)
Total Deferred Tax Liabilities
(29
)
(36
)
Net Deferred Tax Assets/(Liabilities)
808
663
Deferred taxes on Inter
-
company transactions
82
105
Total Deferred Tax Assets
$
890
$
768
As Reported on the Balance Sheet
Current assets
—
Deferred Income taxes
$
274
$
196
Non
-
current assets
—
Deferred Tax Assets
616
574
Other non
-
current liabilities
—
(
2
)
Total Deferred Income Taxes
$
890
$
768